Moscow, 5 August 1997 (RFE/RL) - At the last minute, Prime Minister Viktor Chernomyrdin yesterday ordered a halt to the tender for sale of the 38% state shareholding in Norilsk Nickel, after he had received an appeal from the Procurator-General. An announcement of the tender award, expected to go to the Uneximbank-MFK group, had been scheduled for Tuesday [August 5] in Moscow.

The Chernomyrdin move came at the end of a dramatic day of lobbying by of the government officials, and of the bank. By putting a stop to the takeover of Russia's premier metals company by Uneximbank, Chernomyrdin has struck a serious blow to the bank's plans to expand its holdings in strategic sectors of the economy.

The prime minister has also hit back at Uneximbank's supporters in the government, First Deputy Prime Ministers Anatoly Chubais and Boris Nemtsov, who last week backed Uneximbank's surprise win of a 25% stake in the leading telecommunications concern, Svyazinvest.

Alexander Voznesensky, a spokesman for Chernomyrdin, had told RFE/RL early today "the Prime Minister isn't making any comments on the issue. But he has put the Procurator-General and the Ministry of Justice in charge of checking the legality of the Norilsk Nickel tender."

Officials at the Procurator-General's office would not provide any details. RFE/RL has confirmed, however, that more than a fortnight ago, they received a report on the tender from the Accounting Chamber, Russia's independent state auditor. The Chamber is reported to have said that the transaction was illegal on several grounds, and in violation of presidential decrees, government resolutions, the privatization statute, and the newly enacted Civil Code. It recommended to the Procurator-General that he take action to stop the share sale.

At the Ministry of Justice, an official told RFE/RL he couldn't confirm if a check is under way of the Norilsk Nickel case.

Two companies have been registered officially as participants in the tender. One of them is an affiliate of the Uneximbank-MFK group, which secured the shares for just over 171 million dollars in November 1995. The other is a company named Taiga, reportedly bidding together with EnergoTransProm, with financial backing said to come from the Trans-World Group of London. Trans-World chief executive David Reuben, and the group's lawyers Mayer Brown Platt, have sent letters, and issued statements, accusing Uneximbank-MFK of rigging the tender conditions to favor themselves. They also claim that Uneximbank-MFK will pay less money to capture the tender than the shares are worth.

Sergei Chernitsin, spokesman for Uneximbank, told RFE/RL there was no truth to the press claim that Chernomyrdin's office had received an appeal from the Procurator-General.

Minutes before Chernomyrdin's decision was flashed to the press, a source in the Prime Ministry told RFE/RL that documents had been received and were being evaluated. "Until they are signed," the official said, "there will be no information released concerning them."

Uneximbank had been confident it could dissuade Chernomyrdin from intervening in the last-ditch move to stop the takeover. "No legal ground exists for cancellation of the tender," Chernitsin said. "It can only be postponed, and only in the circumstance there is one bidder. This can only be decided by the organizers of the auction and the Russian Federal Property Fund. We are acting in accordance with the Civil Code."

Uneximbank, said Chernitsin, believes that "at this point postponement or cancellation is unlikely."

An additional challenge to the disposal of the Norilsk Nickel shares has come from Norilskgaz, the energy supplier which cut off Norilsk Nickel's gas supply in an argument over unpaid bills. Norilskgazprom has appealed to the Krasnoyarsk region arbitration court, demanding the Norilsk plant be forced into bankruptcy. Simultaneously, it asked the Moscow authorities to change the conditions of the tender that deal with investment in development of new gas deposits in the region. Norilskgazprom claims it is owed 3 trillion rubles (about $520 million).